by Last week, it was widely reported that the Drug Enforcement Administration (DEA) will soon recommend rescheduling cannabis (i.e., marijuana) from a Schedule I substance to a Schedule III substance under the federal Controlled Substances Act. This follows the August 2023 report from the Department of Health and Human Services supporting the change in controlled substance scheduling. The report concluded that cannabis has accepted medical value, with a risk profile similar to that of Schedule III controlled substances.
Next Steps:
DEA recommendations for rescheduling are reviewed by the White House Office of Management and Budget and, upon approval, are subject to a public hearing to receive testimony from experts and the public regarding the proposed rescheduling. Only after this process will a rescheduling occur.
Impact of Change on Medical and Recreational Use of Cannabis:
The change to Schedule III has a possible effect on the medical use of cannabis. The rescheduling could provide an opportunity for the U.S. Food and Drug Administration (FDA) to approve THC-based products to be prescribed by doctors. This would align cannabis and THC-related prescriptions with the same requirements as other prescribed substances.
The rescheduling as a Schedule III substance would not affect the legalization of recreational cannabis use. The most significant impact, aside from criminal sentencing for use and possession, is on the cannabis industry in states allowing cannabis for medical or recreational use. It would not make adult-use cannabis businesses legal under federal law even if the business complies with state law. It would allow cannabis businesses to be treated like other similarly situated businesses in some ways. For example, the IRS Code currently prevents cannabis businesses from deducting ordinary business expenses. The prohibition does not apply to businesses involving Schedule III substances, and therefore, a schedule change could increase business profitability by allowing business deductions.
Impact of Change on Employer Practices:
There is little direct impact on employers from a rescheduling of cannabis other than the likely expansion of cannabis availability and use. Employers will still be subject to state laws covering cannabis use. The change in controlled substance scheduling would not change employer policies prohibiting employees from using or being under the influence of cannabis on the job.
Employers could, however, experience changes in practice and policy if the FDA approves the prescription of cannabis-based medications. Medications could become available nationwide and be covered by employer-provided insurance. Troubling for many employers is the prediction by some legal commentators that a change by the FDA could result in employers being required to consider the use of cannabis-based drugs as a reasonable accommodation under the Americans with Disabilities Act (ADA).
These projected consequences of FDA action assume that the path from the DEA to the White House Office of Management and Budget to public hearings to rescheduling adoption to the FDA doesn’t include some detours that would limit the nationwide availability of prescribed THC-based medications, insurance coverage of the THC-based prescriptions, or the use of such medications as a possible accommodation under the ADA.
For more details on the expected impact of rescheduling cannabis as a Schedule III drug:
The Congressional Research Service, a nonpartisan shared staff group that provides research to congressional committees and Members of Congress, has published two reports on the impact of the proposed rescheduling. The 2023 report details how the change would affect various businesses and federal benefits. https://crsreports.congress.gov/product/pdf/IN/IN12240
On May 1, 2024, the group published an updated report addressing additional issues. https://crsreports.congress.gov/product/pdf/LSB/LSB11105
